CIMA Sri Lanka conducted a seminar on the new Foreign Exchange Act No. 12 of 2017 on the recently at the BMICH, Colombo recently.
The seminar included presentations by Udeni P Alawattage, Director of Department Foreign Exchange who provided an overview of the financial system of Sri Lanka and the new Act and Suresh R.I. Perera, Principal – Tax & Regulatory, KPMG. Thiswas followed by a panel discussion.
Alawattage in delivering his presentation highlighted the policy rationale for the introduction of the foreign exchange act and also the key changes vis a vis the Exchange Control Act. Alawattage provided a brief outline on the changes to the accounts and the limits for outward remittance.
Suresh Perera covered many areas of the new Act including new Accounts, Capital and current transactions, the identification of a ‘resident’, import and export of foreign currency and Sri Lankan currency, amnesty provision, holding of foreign exchange in possession, and the administrative and penal provisions among others.
Perera also pointed out in his presentation that the Schedule B of the Board of Investment Law includes the Exchange Control Act and has not been amended to include the Foreign Exchange Act. Hence, the BOI are not able to extend the relaxations under foreign exchange regime to the investors.
Perera mentioned that when resolving the issue in relation to the BOI both existing agreements that have already been granted exchange relaxations under the exchange control Act and also the new agreements entered in to post the introduction of the new foreign exchange Act should be looked in to.
The presentations were followed by a lively and informative panel discussion with eminent personalities from the industry including Renuka Weerakoon, Executive Director, Board of Investment, Shanaz Kamileen, Assistant Controller of Exchange, and Pavithri Vithanage, Senior Assistant Director, Legal and Compliance Department, CBSL, ManiqueKiriella Bandara, Compliance Officer at National Development Bank PLC and both the speakers. The panel session was moderated by Rifka Ziyard, Associate Director, Tax & Regulatory, KPMG.
Initiating the panel discussion, Ziyard mentioned that the new foreign exchange act has led to additional compliance burden on the Authorized Dealers and the regulator will emphasize on providing guidance to the Authorized Dealers and others.
In response to the Moderator’s comments, Manique Bandara agreed that there is additional work for the Authorized dealers and emphasized that implementation of any new Act is not without its challenges. She said the key is to work between the parameters and guidelines given.
Renuka Weerakoon clarified the position of companies with BOI agreements in relation to the Act. She stated that as the Foreign Exchange Act is not covered in Schedule B of the BOI law, such companies are subject to the provisions of the new Act. However, the BOI is in process of consultations in order to include the Foreign Exchange Act under Schedule B of the BOI Law.
In response to a question from the audience, Pavithri Vithanage stated that individuals in Sri Lanka are allowed to invest in any company outside Sri Lanka with the exception of cryptocurrencies.
She also stated that as the Act is principle based, it is imperative to exercise judgement and rationality in the interpretation and application of the Act.
In relation to a questions from the moderator whether the legal tender of Sri Lanka has changed, Alawattage stated that the legal tender of the country is still the Sri Lankan rupee Perera enlightened the audience on the reason for the ambiguity is due to Section 5 of the FEA, where it states that payments can be made using foreign currency within or outside Sri Lankathrough an authorized dealer. This conflict with Section 4 of the Monetary Law Act and Mr. Perera stated that as per the presumption the new Act should prevail.
Further Shaanaz Kamileen responding to a question from the audience, mentioned that trusts are not identified as persons eligible to invest outside Sri Lanka. If one considers the beneficiaries of the trust to be individuals, they will be subject to the lifetime limit of USD 200,000.
In relation to the amnesty, Alawattage mentioned that currently the Central bank is in discussion with the Inland Revenue Department and that a process will be documented and shared.
Add new comment